Also known as: financial interests · pecuniary interest
Written by attorneys · grounded in primary & secondary sources — see below
An interest involving money or its equivalent. The interest commonly takes the form of an investment or other stake that can be affected by the outcome of a transaction or proceeding.
Antonio told Elena that he had overridden safety systems at the plant to avoid termination. A reasonable person in his position would have made that admission only if he believed it true because it exposed him to loss of his job and civil liability. Elena's testimony about the statement is offered in a later negligence suit.
A lawyer learns that a client is using the lawyer's services to carry out a scheme that will cause substantial monetary loss to third parties. The lawyer reasonably believes disclosure is necessary to stop the ongoing fraud. The lawyer may reveal information relating to the representation to prevent the injury.
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A client has already committed fraud through the lawyer's prior services and the resulting harm to another party's property is reasonably certain to occur. The lawyer may disclose information to mitigate or correct the substantial financial damage that has resulted from the client's conduct.
A lawyer proposes to purchase property from a client on terms that give the lawyer an ownership stake directly opposed to the client's interests. The lawyer must ensure the transaction is fair and reasonable, fully disclose the terms in writing, and advise the client to seek independent counsel before proceeding.
A product reviewer wrote a negative article about a competitor's speakers while holding a patent on a rival design that would gain value if the competitor's product failed. The court examined whether the reviewer's ownership interest created bias that affected the truth of the published statements.
An attorney helped organize litigation by soliciting clients for a civil rights organization in exchange for a share of any recovery. The arrangement gave the attorney a direct financial stake in the outcome of the suits she helped initiate.
A statement qualifies when a reasonable person in the declarant's position would have made it only if believing it true because it was contrary to the declarant's proprietary or pecuniary interest. The statement must expose the declarant to loss of money or property or to civil or criminal liability.
A lawyer may reveal information when necessary to prevent the client from committing a crime or fraud that is reasonably certain to cause substantial injury to the financial interests or property of another and in which the client has used the lawyer's services. Disclosure is also permitted to mitigate or rectify such injury after it has occurred.
A lawyer may not enter a business transaction with a client or knowingly acquire an ownership, possessory, security, or other pecuniary interest adverse to the client unless the transaction is fair and reasonable, the terms are fully disclosed in writing, the client is advised to seek independent counsel, and the client gives informed consent confirmed in writing.
A judge must disqualify when the judge, the judge's spouse, or a minor child residing in the household has a financial interest in the subject matter in controversy or in a party. Financial interest includes ownership of a legal or equitable interest however small, subject to narrow exceptions for mutual funds and certain organizational offices.
…has been suggested that the state law may contain an invidious discrimination because it treats those organizations that have a pecuniary interest in litigation (for example, an insurance company) differently from those that do not. But surely it cannot be said that this distinction, which is so closely related to traditional concepts…